Wednesday, May 20, 2015

Tennessee family accused of spending $187M raised for cancer charities on themselves

Federal regulatory officials Tuesday accused a Tennessee family of spending more than $187 million collected for cancer charities on cars, gym memberships, cruise vacations, and college tuition.

The Federal Trade Commission, in a federal lawsuit joined by all 50 states and the District of Columbia, said that James T. Reynolds Sr., his ex-wife and son raised the money through their various charities: The Cancer Fund of America in Knoxville, Tennessee, and its affiliated Cancer Support Services; The Breast Cancer Society in Mesa, Arizona; and the Children's Cancer Fund of America in Powell, Tennessee.

The charities hired telemarketers to collect $20 donations from people across the country, telling consumers that they provided financial aid and other support to cancer patients, including pain medication, transportation to chemotherapy visits and hospice care.

But little money made it to cancer patients, as the groups "operated as personal fiefdoms characterized by rampant nepotism, flagrant conflicts of interest, and excessive insider compensation" with none of the controls used by bona fide charities, the FTC said Tuesday.

Jessica Rich, director of the FTC's Bureau of Consumer Protection, declined to say whether authorities were pursuing a separate criminal investigation against the Reynolds family, saying only that the agency did not have the authority to do so.